VW is trying to make savings and become more efficient to help fund a costly shift to EVs in the wake of the diesel emissions scandal that broke out in September 2015.

Highlights

VW is making savings to help fund a costly shift to EVs

The move may help to smooth relations between the brands

VW will pursue its premium brands to expand to other regions

German car-makers, Volkswagen will make its three mass-market brands more distinct to reduce overlaps and defuse tensions within the car making group, its chief executive said on Thursday. The German company is striving to make savings and become more efficient to help fund a costly shift to electric vehicles in the wake of its diesel emissions scandal. CEO Matthias Mueller said the automaker's executive board had set out a new focus for its mass-market VW, Skoda and Seat brands based on 14 customer groups in its core European market.

"The key challenge is (to achieve) a perfect market coverage with clear territories for the brands," he told a strategy meeting of about 400 managers in Wolfsburg.

"We must now be able to better use the synergies that our unique alliance of brands offer than we have done to date."

The move may help to smooth relations between the brands.

VW sources told Reuters last week that managers and unions were seeking to curb competition from lower-cost stablemate Skoda, move some of its production to Germany and make the Czech brand pay more for shared technology.

That sparked at backlash at Skoda. Concerned about the possibility of losing work to Germany, the Czech brand's main union threatened to cut back on overtime work. Czech Prime Minister Bohuslav Sobotka also demanded talks on the issue with Skoda's leadership.